Individual Benefits EXAMPLE

There are many benefits to individual Common Good Bank depositors and borrowers, compared to conventional banks and credit unions. Quantifying or even listing those benefits can be challenging, because the Common Good Bank model is so community-focused. Nonetheless, here are two examples of how an individual might benefit under certain specific conditions. In the DEPOSITORS example, a depositor gets an effective interest rate of 8% to 40% (plus $1,100,000 for the community). In the BORROWERS example, an average borrower gets an extra paid week off every year (plus housing, employment and community survival in hard economic times).

A. DEPOSITORS

In order to make this example as specific as possible, let's make the following reasonable assumptions:

1. The bank currently has 5,000 depositors, increasing by 12% a year.
2. Each depositor has, on average, $4,000 in deposits and $1,500 of Common Good Bank stock.
3. The bank's profits are similar to other banks' profits: about 1% Return on Assets.
4. The bank offers similar interest rates to what other banks offer, say 2% on checking accounts, and 1% more on stock than what other banks offer on CDs (say 6%).
5. Let's say your individual income is $30,000 a year and you just manage to keep your head above water each month (accumulating neither savings nor debt).
6. Let's assume that you manage to keep an average checking account balance of $500 and an average monthly minimum of $250, with a safety net of $1,000 in Common Good Bank stock, which you would otherwise keep in a savings account at a conventional bank.
7. In a typical year, living so close to the edge, you would probably have a couple of $100 overdrafts, which would cost you $30 each at an ordinary bank.
8. Let's say you use your local debit/credit card (instead of your Visa Card) to spend 10% of your monthly income ($250) locally, on 3 transactions with merchants who offer a rebate for Common Good Bank depositors, for example at the local grocery store.
9. Let's assume conservatively that these merchants give, on average, a 2% discount for Common Good Bank depositors (half to the community fund).
10. Let's assume (conservatively) that an amount of local currency has been issued equal in value to 10% of the deposits held by the bank -- half of that amount through loans and half through grants.
11. Let's assume that, due to the bank's common good mission and democratic control, community members have already succeeded in establishing a cooperative insurance program, financed by the bank, saving each participant (for example) $400 a year in insurance costs.
12. Finally, half of the money in the bank's Community Fund is required to be given away OUTSIDE the local community, to empower those most in need elsewhere. Let's assume in this example that the depositors decide to send that half of the Community Fund money to Heifer International.

ANNUAL BENEFITS (to depositors) OVER CONVENTIONAL BANKS:

Personal Savings: $499, about 40% (8% not counting the insurance savings)

• Rebates on transactions with participating merchants: 12 * $250 * (2% / 2) = $30
• Overdraft fees avoided: 2 * $30 = $60
• Extra interest on stock: $1,000 * 1% = $10
• Short term loans to cover overdrafts: -$100 * 2 * (6% / 12) = -$1
• Insurance savings: $400

Community Savings: $1,100,000 ($887,500 local, plus $212,500 to Heifer International -- about 1,771 goats)

• Dividends that would otherwise go to individual stockholders: 1% * 5000 * ($4,000 + $1,500) = $275k
• Use of local debit/credit card (if everyone used it as you did); merchant savings: 12 * ($250 * 2% + 3 * $0.25) * 5000 = $345k
• Merchant contributions to community fund (advertising costs, from the merchants point of view): 12 * $250 * (2% / 2) * 5000 = $150k
• New local currency money created for grants: 10% * (12% * 5000) * ($4000 + $1,500) / 2 = $165k
• New local currency money created for loans not backed by dollar deposits: $165k

Depositors also have the benefit of knowing that all of their money is being used for good things, possibly helping to save the world from environmental disaster.

B. BORROWERS:

Business Borrowers:

Let's say that the bank's entrepreneurial committee (the "Common Good" committee) has already identified needs in the community for new enterprises and, by creating and financing new worker-owned businesses, has helped 15 wage-workers (one-tenth of one percent of the 15,000 member community) become worker-owners, thereby doubling their salaries (or halving their work time -- their choice). Assume all 15 are members of the Common Good Bank. If the bank has 300 business borrowers, then on average each business borrower saves, every year: (15/300) * (52 weeks - 2) * 5 daysperweek / 2 = 6.25 work days per year (an extra week of vacation!). These annual savings are likely to continue for the borrower's entire work life and we expect the number to increase steadily - perhaps until it reaches as much as 125 days per year saved for the average borrower.

Mortgage Borrowers:

Common Good Bank communities can make home ownership more affordable by sharing ownership with the borrower, by supporting housing cooperatives, by funding community initiatives for low-income housing projects, and by funding energy-efficiency improvements. These benefits are hard to quantify for the individual borrower.

Low-income community members are also more likely to be granted a loan by a Common Good Bank community than by a conventional bank. We may require participation in a personal financial management education program and/or Grameen-style borrower groups, for some borrowers. The value of getting a loan versus not getting one is hard to quantify, but is surely very high.

Finally, for both depositors and borrowers, Common Good Bank communities provide an immediately workable fall-back in case of a sudden collapse of the national or global economic system. As a local model with an integrated local currency plan, Common Good Bank communities will make it possible for communities to thrive and to help other communities survive, while the larger system falls apart.